Vijay Mallya’s Kingfisher Airlines is king of defaulters at Rs 4,022 crore

Sidhartha, TNN | Jul 17, 2014, 03.15AM IST

NEW DELHI: Vijay Mallya-promoted Kingfisher Airlines has emerged as the country's top non-performing asset (NPA) after it has failed to repay loans of over Rs 4,000 crore borrowed mainly from state-owned banks. It highlights the woes of lenders saddled with bad debt and in need to raise Rs 2.4 lakh crore over the next five years to meet the economy's growing funding needs.

At number two is Winsome Diamond & Jewellery (earlier called Su-raj Diamond), which owes banks over Rs 3,200 crore, followed by engineering firm Electrotherm India (over Rs 2,600 crore).

Together, the top 50 defaulters had outstanding of over Rs 53,000 crore at the end of December 2013, the period for which data was submitted to the finance ministry. There were at least 19 companies on the list which had outstanding amount of over Rs 1,000 crore.

Public sector banks recently submitted the list of top non-performing loans to the finance ministry, which has asked them to focus on these large borrowers to dispel the impression that lenders are soft in recovering loans from companies.




For years the government has been talking of cracking down on loan defaulters but there has been limited progress as the borrowers take exploit the legal loopholes to delay repayment. Data with the finance ministry reveals that banks had only managed to recover a little under Rs 1,100 crore, with half the amount coming from Mallya's Kingfisher Airlines.

Today, banks have non-performing and restructured assets of close to Rs 6 lakh crore. Some of the borrowers have been hit by the economic slowdown while poor decision making in the government forced several others into a financial crisis. But in a large number of cases the promoters have taken little burden and continue to lead a lavish lifestyle.

If the entire Rs 53,000 crore is recovered — a tough task as bankers admit — banks would be able to meet nearly quarter of their resource requirement for the next five years. This will reduce the need for the government to sell its shares in the state-run entities to help them meet their capital requirement and also do away with the need for banks to sell their real estate and stake in joint ventures.

Banks have already written off the amount and any recovery will be added to their profits.

The outstanding in top 50 NPAs is in addition to several others who have been classified as wilful defaulters. In fact, even from this list those like Mallya and other directors on the airline board have been served a snotice to be declared 'wilful defaulter' that will choke fund flow to other group companies.